Wrap Text
Unaudited Condensed Consolidated Interim Results for the six months ended 30 September 2017
HOSKEN CONSOLIDATED INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
Registration number: 1973/007111/06
Share code: HCI
ISIN: ZAE000003257
("HCI" or "the company" or "the group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS
for the six months ended 30 September 2017
Income +3.1%
EBITDA +0.9%
Headline earnings -4.3%
Headline earnings per share +8.9%
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 September 30 September 31 March
2017 2016* 2017
R'000 R'000 R'000
ASSETS
Non-current assets 62 849 188 59 866 363 61 845 515
Property, plant and equipment 25 321 070 24 019 665 25 127 835
Investment properties 9 022 356 8 054 717 8 510 174
Goodwill 4 791 000 4 794 460 4 785 158
Interest in associates and joint ventures 1 587 342 1 341 019 1 454 782
Other financial assets 1 274 661 1 284 787 1 275 663
Intangibles 19 584 845 19 630 778 19 605 686
Deferred taxation 575 459 492 233 379 252
Operating lease equalisation asset 69 765 54 759 80 393
Long-term receivables 622 690 193 945 626 572
Current assets 9 776 811 8 089 815 8 563 616
Inventories 956 496 1 092 446 955 733
Programme rights 929 956 691 906 866 244
Other financial assets 41 099 45 757 38 333
Trade and other receivables 3 457 104 3 039 254 2 541 697
Taxation 105 753 153 232 101 431
Bank balances and deposits 4 286 403 3 067 220 4 060 178
Disposal group assets held for sale 87 117 1 820 177 126 632
Total assets 72 713 116 69 776 355 70 535 763
EQUITY AND LIABILITIES
Equity 37 781 006 34 382 330 36 119 875
Equity attributable to equity holders
of the parent 16 390 408 15 007 827 15 755 603
Non-controlling interest 21 390 598 19 374 503 20 364 272
Non-current liabilities 24 497 016 21 966 649 22 868 060
Deferred taxation 7 921 077 8 134 490 8 081 558
Long-term borrowings 15 780 980 12 563 088 13 999 138
Operating lease equalisation liability 221 728 271 351 254 740
Other 573 231 997 720 532 624
Current liabilities 10 435 094 13 214 892 11 543 748
Trade and other payables 3 331 500 4 322 448 3 210 411
Current portion of borrowings 3 294 215 5 977 486 5 194 588
Taxation 176 411 118 757 124 115
Bank overdrafts 3 070 755 2 164 938 2 396 036
Other 562 213 631 263 618 598
Disposal group liabilities held for sale - 212 484 4 080
Total equity and liabilities 72 713 116 69 776 355 70 535 763
Net asset carrying value per share (cents) 18 513 17 055 17 897
* Restated
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited
30 September 30 September
% 2017 2016*
change R'000 R'000
Revenue 7 195 902 6 812 530
Net gaming win 4 280 185 4 322 864
Income 3.1% 11 476 087 11 135 394
Expenses (8 630 785) (8 314 722)
EBITDA 0.9% 2 845 302 2 820 672
Depreciation and amortisation (712 349) (708 003)
Operating profit 2 132 953 2 112 669
Investment income 187 220 114 360
Finance costs (910 963) (766 304)
Share of profits of associates and joint ventures 78 088 22 234
Gain on bargain purchase - 12 764
Investment surplus 1 772 46 131
Asset impairments (8 026) (4 997)
Impairment of goodwill and investments (412) -
Profit before taxation (3.7%) 1 480 632 1 536 857
Taxation (99 502) (395 725)
Profit for the period from continuing operations 1 381 130 1 141 132
Discontinued operations (70 400) (224 115)
Profit for the period 1 310 730 917 017
Attributable to:
Equity holders of the parent 584 694 376 611
Non-controlling interest 726 036 540 406
1 310 730 917 017
* Restated
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Unaudited
30 September 30 September
2017 2016
R'000 R'000
Profit for the period 1 310 730 917 017
Other comprehensive income:
Items that may subsequently be reclassified to profit or loss
Foreign currency translation differences 37 117 (158 733)
Reclassification of foreign currency differences on disposal 723 (253 799)
Cash flow hedge reserve (53 733) (73 683)
Available-for-sale financial asset revaluations - (19 006)
Total comprehensive income 1 294 837 411 796
Attributable to:
Equity holders of the parent 581 123 1 975
Non-controlling interest 713 714 409 821
1 294 837 411 796
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited
30 September 30 September
2017 2016
R'000 R'000
Balance at the beginning of the period* 36 119 875 32 928 450
Share capital and premium
Treasury shares released 27 343 13 545
Shares repurchased - (1 722 859)
Current operations
Total comprehensive income 1 294 837 411 796
Equity-settled share-based payments 5 783 5 106
Acquisition of subsidiaries (1 092) 1 954 607
Disposal of subsidiaries 7 750 (327 275)
Effects of changes in holding 1 005 991 1 655 996
Dividends (679 481) (537 036)
Balance at the end of the period 37 781 006 34 382 330
* Restated
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited
30 September 2017 30 September 2016
% Gross Net Gross Net
change R'000 R'000 R'000 R'000
Earnings attributable to equity holders
of the parent 55.3% 584 694 376 611
Gain on bargain purchase - - (12 764) (5 535)
Loss on disposal of business assets - - 191 134 37 533
Losses on disposal of plant and equipment 2 475 558 171 239
Impairment of plant and equipment 24 415 18 508 1 775 597
Foreign currency translation reserve recycled 723 307 (253 844) (216 314)
Losses from disposal/part disposal of subsidiary 14 1 542 419 370 401 702
Impairment of associates and joint ventures 412 151 85 18
Recycle of fair value reserves relating to
available-for-sale financial instruments - - (46 250) (20 056)
Losses on disposal of investment property - - 119 30
Remeasurements included in equity-accounted
earnings of associates and joint ventures (58 489) (55 594) - -
Headline profit (4.3%) 550 166 574 825
Basic earnings per share (cents)
Earnings 76.7% 661.94 374.64
Continuing operations 727.06 571.64
Discontinued operations (65.12) (197.00)
Headline earnings 8.9% 622.85 571.82
Continuing operations 665.93 547.27
Discontinued operations (43.08) 24.55
Weighted average number of shares in issue ('000) 88 330 100 526
Actual number of shares in issue at the end of
the period (net of treasury shares) ('000) 88 533 87 997
Diluted earnings per share (cents)
Earnings 77.4% 657.03 370.45
Continuing operations 721.67 565.24
Discontinued operations (64.64) (194.79)
Headline earnings 9.3% 618.23 565.43
Continuing operations 660.99 541.15
Discontinued operations (42.76) 24.28
Weighted average number of shares in issue ('000) 88 991 101 662
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
30 September 30 September
2017 2016
R'000 R'000
Cash flows from operating activities 27 463 863 086
Cash generated by operations 3 020 949 3 297 753
Net finance costs (803 872) (677 200)
Changes in working capital (1 110 634) (589 512)
Taxation paid (401 547) (511 879)
Dividends paid (677 433) (656 076)
Cash flows from investing activities (1 369 942) (1 051 070)
Business combinations and disposals 15 934 347 083
Investments acquired (64 566) (514 686)
Dividends received 54 024 66 602
Decrease in loans and receivables 12 752 366 332
Intangible assets acquired (26 214) (16 093)
Investment properties
- Additions (520 667) (234 451)
- Disposals 26 900 -
Property, plant and equipment
- Additions (878 906) (1 119 068)
- Disposals 10 801 53 211
Cash flows from financing activities 881 406 652 098
Ordinary shares issued and treasury shares released 26 591 7 838
Ordinary shares repurchased - (1 718 936)
Transactions with non-controlling shareholders 980 979 688 055
Net funding (repaid) raised (126 164) 1 675 141
(Decrease) increase in cash and cash equivalents (461 073) 464 114
Cash and cash equivalents
At the beginning of the period 1 673 363 520 432
Foreign exchange differences 3 358 (23 595)
At the end of the period 1 215 648 960 951
Bank balances and deposits 4 286 403 3 067 220
Bank overdrafts (3 070 755) (2 164 938)
Cash in disposal groups held for sale - 58 669
Cash and cash equivalents 1 215 648 960 951
SEGMENTAL ANALYSIS
Unaudited Unaudited
six months ended six months ended
30 September 2017 30 September 2016*
Net gaming Net gaming
Revenue win Revenue win
R'000 R'000 R'000 R'000
Media and broadcasting 1 203 634 - 1 262 538 -
Non-casino gaming 38 369 716 023 45 989 643 959
Casino gaming and hotels 2 803 744 3 564 162 2 615 271 3 678 905
Transport 849 640 - 817 064 -
Properties 241 688 - 216 921 -
Mining 610 552 - 512 835 -
Branded products
and manufacturing** 1 439 516 - 1 340 897 -
Other 8 759 - 1 015 -
Total 7 195 902 4 280 185 6 812 530 4 322 864
* Restated
** Vehicle component manufacture operations' results reclassified to the branded products
and manufacturing segment in the current and prior period
EBITDA Profit before tax
Unaudited Unaudited
six months ended six months ended
30 September 30 September
2017 2016* 2017 2016*
R'000 R'000 R'000 R'000
Media and broadcasting 125 376 285 160 45 075 198 511
Non-casino gaming 257 417 210 885 177 078 134 255
Casino gaming and hotels 2 005 623 1 910 189 1 037 769 1 067 539
Transport 194 043 213 230 129 076 158 879
Properties 102 154 90 944 36 611 32 760
Mining 150 797 97 129 110 373 47 961
Branded products
and manufacturing** 60 013 75 566 5 113 27 338
Other (50 121) (62 431) (60 463) (130 386)
Total 2 845 302 2 820 672 1 480 632 1 536 857
* Restated
** Vehicle component manufacture operations' results reclassified to the branded products
and manufacturing segment in the current and prior period
Headline earnings
Unaudited
six months ended
30 September
2017 2016
R'000 R'000
Media and broadcasting 12 486 65 631
Non-casino gaming 65 221 48 610
Casino gaming and hotels 430 847 373 563
Information technology - 4 920
Transport 84 623 110 498
Beverages - 16 491
Properties 26 944 25 185
Mining 79 884 35 687
Branded products and manufacturing** (5 586) 1 873
Other (144 253) (107 633)
Total 550 166 574 825
** Vehicle component manufacture operations' results reclassified to the branded products
and manufacturing segment in the current and prior period
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The results for the six months ended 30 September 2017 have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), the disclosure requirements
of IAS 34, the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee, the requirements of the South African Companies Act, 2008, and the Listings
Requirements of the JSE Limited. The accounting policies applied by the group in the
preparation of these condensed consolidated interim financial statements are consistent
with those applied by the group in its consolidated financial statements for the year
ended 31 March 2017. As required by the JSE Limited Listings Requirements, the group
reports headline earnings in accordance with Circular 2/2015: Headline Earnings as
issued by the South African Institute of Chartered Accountants.
These financial statements were prepared under the supervision of the financial director,
Mr TG Govender, B.Compt (Hons) and have neither been audited nor independently reviewed
by the group's auditors.
DISCONTINUED OPERATIONS AND DISPOSAL GROUPS HELD FOR SALE
Media and broadcasting
The board of eMedia Investments resolved to exit certain of its offshore and local
non-core operations during the financial year ending 31 March 2015. The results of these
operations are included in the media and broadcasting segment and are included in
discontinued operations in the current and prior periods. An investment property with
a carrying value of R23 million is classified as held for sale in the statement of
financial position in the current period.
Branded products and manufacturing
The board of Deneb Investments resolved during the period to significantly rationalise
its Wineland Textiles division, as well as its Seartec digital and electronic equipment
division. The results of the discontinued operations of these divisions are included
in discontinued operations in the income statement in the current and prior periods.
Property, plant and equipment to the value of R2 million is held as disposal group
assets held for sale by Deneb Investments.
Non-casino gaming
During March 2017 the group contracted to dispose of subsidiaries Jacaranda Royal Casino,
VSlots Lesotho and VSlots Swaziland. The disposals were concluded in June 2017 and the
results of these businesses included in discontinued operations in the current and
prior periods.
The results of discontinued operations were as follows (R'million):
Branded
products and
manufacturing
Media and textiles and Non-casino
broadcasting electronic gaming
non-core equipment non-core
operations divisions operations
Loss after tax (3) (65) -
Profit (loss) on disposal 1 - (3)
Foreign currency translation reserves reclassified
to profit and loss (1) - -
DISPOSALS
The group disposed of the following subsidiaries during the current period:
- Jacaranda Royal Casino, VSlots Lesotho and VSlots Swaziland, effective June 2017,
for an aggregate consideration of R3 million.
- Lalela Music SA, Lalela Music LLC, e.Botswana and e.tv Botswana, effective June 2017
for the Lalela entities and September 2017 for the Botswana entities, for an aggregate
consideration of R28 million.
RESULTS
GROUP INCOME STATEMENT AND SEGMENTAL ANALYSIS
Media and broadcasting
Revenue in respect of media and broadcasting includes only revenue from eMedia as
revenue from Sunshine Coast Radio in Australia was included in discontinued operations
in the prior comparative period. eMedia recorded a decrease in revenue of 5% against
the backdrop of a 30% decrease in licence revenue, for eNCA and the five channels provided
to DSTV combined, due to the implementation of the new licence agreement. A 7% increase
in advertising revenue was recorded in a difficult television advertising environment.
Property and facility and content revenue decreased by a combined 9%. EBITDA decreased
by 56% and is all attributable to eMedia. The decrease in EBITDA is mainly attributable
to the decrease in subscription revenue, together with an increase of 10% in programming
costs. Furthermore, forex gains of R20 million included in cost of sales in the prior
period has reversed to a loss of R8 million in the current period. EBITDA includes
losses of R117 million in respect of the multi-channel and OVHD businesses, which increased
revenue from R7 million to R22 million in the current period, but remain in a start-up
phase. Profit before tax decreased by 77% and headline earnings decreased by a similar
margin, with no significant once-off items included in the results of continuing operations.
Non-casino gaming
Net gaming win from non-casino gaming increased by 11% (Vukani 8% and other gaming 16%).
The number of active machines in Vukani has increased by 8% to 5 883 and average GGR per
machine by 0.5% to R19 929. The number of electronic bingo terminals increased to 2 996
during the period. EBITDA from non-casino gaming increased by 22%. Gains of R28 million
in Vukani were assisted by gains of R27 million in other gaming. Profit before tax showed
a 32% increase following the significant increase in EBITDA. Overheads were kept stable,
with staff costs and salaries increasing by only 5%.
Casino gaming and hotels
Revenue in respect of casino gaming and hotels increased by 1.2%. Net gaming win decreased
by 3%, off-set by food and beverage and rental revenue growth (Hospitality Property Fund
("HPF") was consolidated for one month only in the prior comparative period) of 9% and
113%, respectively. Significant decreases in net gaming win were recorded in Montecasino
(10%) and Silverstar (8%), impacted by the opening of Time Square casino in Menlyn and
the general weak trading environment. EBITDA increased by 5%, significantly as a result
of a R70 million long-term incentive scheme expense in the prior period reversing to
a R35 million income in the current period. Profit before tax decreased by 3%. Included
in the prior period was a recycled remeasurement of available-for-sale financial
instruments of R46 million, relating to the shares held in HPF prior to the business
combination. In the current period, transaction, pre-opening and restructure costs of
R64 million are included. Contribution to headline earnings increased to R431 million.
This includes an effective share of R133 million of a deferred tax liability reversal
following the sale of certain hotel properties to the group's REIT, HPF. Excluding
the effect of this reversal results in a decrease in contribution to headline earnings
of 20%. Excluding the dilutionary effect of the issue of shares to non-controlling
interests in August 2016, by the group's holding company for its Tsogo Sun interest,
and the deferred tax reversal, contribution to headline earnings would have decreased
by approximately 9%.
Transport
Transport managed to increase revenue by 4%, following a subsidy increase of 3%, which
was less than that granted in the prior period. EBITDA decreased by 9%. Wage increases
of 12% in Golden Arrow Bus Services outweighed savings in supplies and maintenance costs,
resulting in a R22 million decrease in EBITDA. Profit before tax was further reduced
by an increase of 17% in finance costs and 10% in depreciation. Headline earnings was
not affected by significant items reversed out of profit after tax.
Properties
Properties' revenue increased by 11% due to new development revenue of R20 million from
The Palms, the Makro PE premises and Shell House, with annual escalations in the rest
of the portfolio off-set slightly by a reduction in revenue in the Gallagher Estate
exhibition business. EBITDA increased by 12%, in line with the increase in revenue.
EBITDA gains were somewhat off-set by an increase in finance charges of R10 million,
originating from increased facilities in respect of the Monte Circle precinct,
The Palms and The Point. Headline earnings increased by a reduced margin of 7% due
to the decrease in earnings in the Gallagher Estate exhibition business.
Mining
Increased revenue was recorded at the Palesa and Mbali Collieries. Sales volumes at
Palesa increased by 119 000 tons (17%) in spite of the previously mentioned fatality
and resultant closure during April. In addition, loading activities were halted at
various times during the period due to community unrest in the area surrounding the
Palesa Colliery. Sales volumes at the Mbali Colliery increased by 17% to 461 000 tons.
In addition, export sales prices achieved at the Mbali Colliery were 39% higher than
the prior comparative period. EBITDA increased by 55%, mainly as a result of the
significant increases in sales volumes at both collieries and the increase in the price
of export coal. EBITDA margins at the Palesa Colliery increased from 14% to 18% and
at the Mbali Colliery from 28% to 34% compared to the prior comparative period.
Profit before tax increased by 130% and does not include any box cut cost amortisation.
Headline earnings increased in line with the profit before tax increase.
Branded products and manufacturing
Formex Industries was purchased by Deneb Investments from the company effective end
of July 2017. Due to this amalgamation of the group's manufacturing operations, the
results of Formex have been incorporated into those of Deneb Investments in the branded
products and manufacturing segment for the current and prior period. Branded products
and manufacturing increased revenue by 7%, with growth attributable to their industrial
operations and branded products. Revenue in Formex increased by R33 million due to
additional tooling sales in its pressings division and increased parts revenue in its
tubing division. EBITDA decreased by 21%. Foreign exchange losses improved by R12 million
compared to the prior comparative period, however all business segments faced reduced
gross margins. In addition to factors mentioned under EBITDA, an increase in finance
costs further decreased profits. Headline earnings includes the group's share of
R65 million in discontinued operations' losses and deferred tax income of R32 million.
Impairments of R20 million are included in discontinued operations' losses and
consequently excluded for headline earnings.
Other
EBITDA losses from other decreased significantly as a result of a share-based payment
charge in respect of cash-settled options to directors of Niveus in the prior period
not recurring. Losses before tax decreased by R70 million compared to the prior
comparative period. The prior period included the Niveus share-based payment charge
which did not recur. The decrease in losses is also attributable to an increase in
profits of R55 million from associates, including Impact Oil and Gas, which entity's
equity-accounted earnings in the current period includes an effective R53 million
profit on part disposal of an exploration licence. Included in the current period's
losses is R47 million in equity-accounted profits from associates, R47 million interest
income in La Concorde, R107 million head office finance costs and the remainder head
office and other overheads of the company, Niveus and La Concorde. Headline earnings
included R20 million profit from HCI Australia (non-media) and R40 million investment
income for the Ithuba funding arrangements in the prior period, both of which are
not included in the current period. The current period includes an effective R7 million
profit in La Concorde, R107 million head office finance costs and R6 million in
equity-accounted losses from associates.
Notable items on the consolidated income statement include:
Investment income increased as a result of interest earned on promissory notes and
cash in La Concorde and increased dividend income earned from the investment in
GrandWest and Worcester casinos.
Finance costs increased by R145 million, with head office finance costs increasing by
R7 million, Tsogo Sun finance costs by R124 million and HCI Properties finance costs
by R10 million.
Profit from associates and joint ventures includes R4 million profit from BSG Africa,
R26 million profit from International Hotel Properties and Redefine BDL, and R43 million
profit from Impact Oil and Gas.
The average taxation rate, including once-off items, equals 7% due to the reversal of
R307 million in deferred tax liabilities in Tsogo Sun upon the sale of certain hotel
properties to HPF in the current period. Excluding this reversal, the average taxation
rate approximates 27%.
Headline earnings per share increased by 8.9% with gross headline earnings decreasing
4.3%. The weighted average number of shares in issue in the prior period of 100 526 000
was reduced to 88 330 000 in the current period due to 16 million shares being repurchased
during August 2016, which resulted in the discrepancy between the gross and per share
profit increase.
GROUP STATEMENT OF FINANCIAL POSITION AND CASH FLOW
Group long-term borrowings at 30 September 2017 comprise central borrowings of R1 867 million,
central investment property-related borrowings of R1 668 million, borrowings in Tsogo Sun of
R10 838 million and the remainder in other operating subsidiaries. Included in the current
portion of borrowings is R628 million owing to SACTWU, being part of their proportionate
non-controlling share in eMedia Holdings, R363 million central borrowings and R1 572 million
in short-term borrowings in Tsogo Sun. Current central borrowings of R200 million have
been refinanced subsequent to the reporting date and R80 million repaid. Bank overdraft
facilities include R2 210 million in Tsogo Sun.
Included in cash flow from investing activities is R302 million paid by HPF for various
sections and exclusive use areas of the Sandton Eye sectional title scheme and an
existing real right of extension in the scheme. Transactions with non-controlling
shareholders consist mainly of the rights issue of R1 billion conducted by HPF in August 2017.
Shareholders are referred to the individually published results of eMedia Holdings Limited,
Tsogo Sun Holdings Limited, Niveus Investments Limited and Deneb Investments Limited for
further commentary on the media and broadcasting, casino gaming and hotels, non-casino
gaming, and branded products and manufacturing operations.
COMMENTARY
Headline earnings of the group for the six months to September 2017 retreated 4.3% compared
with the previous comparable period. However headline earnings per share increased by 8.9%
following the repurchase of 16 million shares in August 2016. The decrease in headline
earnings was primarily due to eMedia's earnings being a small fraction of what it had
been in the previous period.
While in some ways this is disappointing, it is the result of the fact that the renewal
of the contract with DSTV, as previously announced, is significantly less lucrative in
the short term. Effectively the contract results in less cash up front but over time
the revenue earned from our five new channels should surpass the revenue lost.
These channels are also the heart of the OpenView experience, for which subscriptions
have climbed to over a million boxes. Several of these channels are already performing
well. We have no doubt the advertising revenue earned by them will grow rapidly over
the next year or two.
Our media group has also succeeded in terminating an onerous long-term contract to use
a second satellite to broadcast OpenView channels. The benefits of this will only be
felt from the 2019 financial year but will result in substantial savings to the group
from April 2018.
The restructuring of Niveus's gaming assets into Tsogo Sun has finally allowed us to
appoint Andre van der Veen to the position of CEO of eMedia and we are confident this
too will release much positive energy there.
The growth of Tsogo's earnings is essentially a reflection of a once-off release of
value through the transfer of various hotel properties into the Hospitality Property
Fund and adjustments arising from the LTI scheme. While the underlying operating
performance of Tsogo remained flat we are confident the inclusion of the faster-growing
areas in the gaming division and the restructuring of that group's property assets
will have a positive effect going forward. Likewise, we are confident the elimination
of potential conflict between our gaming businesses was a restructure both unavoidably
necessary and value enhancing for both Tsogo and HCI.
The profitability of our transport company likewise retreated somewhat from the highs
of the previous period as the US$ price of oil has ticked up and the Rand has weakened
against that currency. Nevertheless, the company continues to be very well run and
has good prospects over time of growing through acquisitions, which will enhance its
profitability in the future.
Mining continued its improved profitability as the coal price remained higher than it
had been during the comparable period. The business remains subject to anarchic
pressures all around it with interruptions caused by various groups physically
obstructing its deliveries and personnel. We have been obliged to take several steps
to protect our operations from such upheaval and are satisfied we can continue to
operate profitably despite this extreme negativity. Nevertheless, it is really hoped
this will subside after the December ANC Elective Conference.
The underlying growth in several of Deneb's operations has been obscured by poor
performances in three operations. The group has taken the decision not to continue
with most of these operations. The losses occasioned by this decision will continue
to affect the second half of the year, but should have no further ill effect on
profitability thereafter.
HCI has continued to increase its exposure to IOG and now holds some 34% of its shares.
Legislation regulating the prospecting of offshore areas, such as those held by IOG,
is now before Parliament in South Africa. It is pivotal to the future prospects of
this company that this legislation is passed in a form acceptable to major oil companies
that have the capacity to drill in deep water. We await the outcome of this process.
IOG was able to successfully farm out its Namibian prospects to Total and has accordingly
again succeeded in persuading a major to invest in its acreage. While this company
remains purely a speculative loss-making exploration company it is steadily advancing
to a point where it will be able to have such prospects drilled over the next couple of years.
Construction of the concentrated solar power plant at Upington continues on time and
within budget and should be almost ready for commissioning by our next report. Likewise,
the property division has virtually completed its shopping centre in Hermanus, which
will be open for trading over the Christmas holidays. The expansion of Sun Coast and
the extension of its prive area are currently under construction.
HCI has participated in a tender for the storage of fuels in the Durban harbour and
is considering participating in a further procurement opportunity. While none of these
prospects are by any means assured we are satisfied that HCI is continuing to find potentially
lucrative areas in which to grow despite a generally weak macroeconomic environment.
CHANGES IN DIRECTORATE
There were no changes in directorate during the period under review.
DIVIDEND TO SHAREHOLDERS
The directors of HCI have resolved to declare an interim ordinary dividend number 56
of 50 cents (gross) per HCI share for the six months ended 30 September 2017 from
income reserves. The salient dates for the payment of the dividend are as follows:
Last day to trade cum dividend Tuesday, 12 December 2017
Commence trading ex dividend Wednesday, 13 December 2017
Record date Friday, 15 December 2017
Payment date Monday, 18 December 2017
No share certificates may be dematerialised or rematerialised between Wednesday,
13 December 2017 and Friday, 15 December 2017, both dates inclusive.
In terms of legislation applicable to Dividends Tax ("DT") the following additional
information is disclosed:
- The local DT rate is 20%.
- The number of ordinary shares in issue at the date of this declaration is 92 814 648.
- The DT amounts to 10 cents per share.
- The net local dividend amount is 40 cents per share for all shareholders who are
not exempt from the DT.
- Hosken Consolidated Investments Limited's income tax reference number is 9050/177/71/7.
In terms of the DT legislation, any DT amount due will be withheld and paid over to the
South African Revenue Service by a nominee company, stockbroker or Central Securities
Depository Participant (collectively "regulated intermediary") on behalf of shareholders.
All shareholders should declare their status to their regulated intermediary as they
may qualify for a reduced DT rate or exemption.
For and on behalf of the board of directors
JA Copelyn TG Govender
Chief Executive Officer Financial Director
Cape Town
22 November 2017
Directors:
JA Copelyn (Chief Executive Officer), TG Govender (Financial Director), Y Shaik,
MSI Gani*, MF Magugu*, NM Mhlangu** ML Molefi*, VE Mphande* (Chairman), JG Ngcobo*, R Watson*
* Independent non-executive ** Non-executive
Company secretary:
HCI Managerial Services Proprietary Limited
Registered office:
5th Floor, 4 Stirling Street, Zonnebloem, Cape Town, 7925. PO Box 5251, Cape Town, 8000
Telephone: 021 481 7560
Telefax: 021 434 1539
Auditors:
Grant Thornton Johannesburg Partnership
@Grant Thornton, Wanderers Office Park, 52 Corlett Drive, Illovo, 2196
Private Bag X10046, Sandton, 2146
Transfer secretaries:
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196. PO Box 61051, Marshalltown, 2107
Sponsor:
Investec Bank Limited
100 Grayston Drive, Sandton, Sandown, 2196
Website address:
www.hci.co.za
Date: 22/11/2017 04:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
